Accountants have warnings and opportunity to flag for Canadians as they prepare to do their taxes for a year when the COVID-19 pandemic vastly changed the employment landscape.
Working from home provides one deduction opportunities.
鈥淭he biggest thing that is new this year is the home-office deduction,鈥� said accountant Mike Bourque, owner of Riverview Tax & Accounting.
There are two ways to take advantage of this deduction, Bourque said: first, there is a simplified $2 a day option up to a maximum of $400, he said.聽
The other detailed option allows those who worked from home more than 50 per cent of the time due to COVID to deduct a portion of rent, electricity, internet and office supplies, said Jos茅e Cabral, senior tax specialist at H&R Block.
On Canada Revenue鈥檚 website, there is a new portal that allows you to enter these types of expenses to calculate which of the two options will be best for you, she said.聽
Those who received CERB need to be prepared to pay tax on the benefit.聽
Cabral said she has been recommending to her clients they set aside 20 per cent on each CERB payment, but how much someone is taxed will depend on what their income is, she said. This might vary based on how much someone earned in the months before the pandemic or if they received the maximum total CERB payment, which will depend on when they applied and if they received it for the duration of the program, she said.
Some could be paying more, she said.聽
Keep in mind the basic federal exception is just $13,229, said Bourque. 聽According to Canada Revenue, this is "a basic, non-refundable tax credit for 聽income tax, known as the personal amount, and adjusted annually to allow for inflation and other factors."
The Canada Recovery Benefit which replaced CERB in the fall has tax withheld, said Cabral.
Canada child benefits also changed this year, said Cabral. Those with children under six years old making less than $120,000 are now eligible for $300 made to them in four payments, or $150 four times a year if they make over $120,000.
The tax filing deadline is April 30, but that doesn鈥檛 mean you should wait until April, said Bourque.
Cabral said many people are unaware that RRSP contributions can be made until March 1 to offset taxes for the previous year. If you see your accountant in February, they can help calculate if it makes sense to buy RRSPs for tax relief reasons, she said.聽
鈥淲hen it comes to taxes, the most important thing is to get ahead of yourself,鈥� she said.
Make sure your receipts are eligible and will stay eligible by making a copy or scan, she said.聽
Taxes can鈥檛 be filed electronically until Feb. 22 now as the CRA site is closed as part of a regular practice. The tax filing deadline is April 30, or June 1 if you have self-employed income, said Bourque.
But now is a wise time to start getting yours done to avoid missing out on GST or other benefits only eligible to those who have filed, he said.
